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THE AUTO INDUSTRY IS IN THE MIDDLE OF A REVOLUTION FROM MASS TO LEAN PRODUCTION MASS Some Western Assemblers Traditional Suppliers LEARNING Many Western Assemblers Transplant Suppliers LEAN Japanese Japanese Suppliers Traditional mass producers will have to become lean to survive

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LEAN PRODUCTION IS DRIVEN BY A SIMPLE PRINCIPLE: Eliminate all costs which do not add value to a product or process

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Issues for Industrial Competitiveness Identify worlds best practice Benchmark your performance against the best Dont imitate competitors, but develop leaner and more focused strategies Focus upon managing the whole system - not parts of it Bring together individuals with knowledge and control Eliminate frozen layer of management Re-assess Training & Education

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CONCLUSIONS WESTERN VMs AND SUPPLIERS CLOSED GAP WITH JAPANESE KEY DRIVER – LEAN MANUFACTURING TECHNIQUES POWER SHIFT FROM VMs TO MEGA-SUPPLIERS BUT – STILL POOR PROFITABILITY WHAT IS NEXT BEST PRACTICE ?

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3DayCar objective To develop an organisational and process framework within which a customers need for a vehicle can be fulfilled in three days, from order placement through manufacture and delivery.

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The research team International Car Distribution Programme International Car Distribution Programme Marketing & Finance Cardiff Business School, Lean Enterprise CentreCardiff Business School, Lean Enterprise Centre Systems & Organisation School of Management, University of BathSchool of Management, University of Bath Environment & Technology – 3 member / 14 person consortium

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The issue Shop-Floor Myopia - Manufacturers (VMs) have spent last 15 years optimising the plant IMVP assembly plant and enterprise benchmarking suggests Europe and US now matching Japan But at detriment to whole order fulfilment chain (Japanese amongst the least flexible) Identify the scope for new entrants in a 3 day market Examine the environmental & resource impact of a large scale move to 3 day cars

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The issue Substantial savings could be realised if VMs moved from stock-push to build-to-order – Flexible production – Integrated players – Modularisation and alternative body- structures – Order amendment – Open order pipeline – Demand segmentation, distribution centres

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Generic Model - Av. Times Order entry Dealer-Manufacturer 3.8 days Order bank 9.8 days Scheduled orders 14.1 days Sequenced orders held 6.0 days Physical production FFD-EOL 1.4 days Loading at factory 0.9 days Distribution to dealer 3.8 days 39.8 Day Car Capability 39.8 Day Car Capability

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Theoretical current best practice OTD leadtime: 11 days Average OTD leadtime (Europe): 40 days 40 to 50 days stock held in the system Clearly, we currently cannot build the 3DayCar ! Summary

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Summary THERE WILL NOT BE A DEFINITIVE 3DAYCAR I.T. SYSTEM MODEL ! Solutions are dependent on existing infrastructure and individual choices by VMs and suppliers: – Total communication package: Covisint – Independent: Volkswagen, Supply On.. (Bosch) Moving from rigid assumption based to permission based systems requires long term strategy Information systems critical to all BTO scenarios – Initially: functions merged and number of systems reduced – Ultimately: aim for real-time information exchange online between all key players to allow the system to act as an optimised whole

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Future Production Technology Future Production TechnologySolving the bottlenecks to flexible production Supplier Opportunities